Tax-Free Childcare
Anees Hussain from our tax department keeps you in the loop about government schemes.
We at Page Kirk like to make our clients aware of any potential tax schemes that can help them save money. Many clients are unaware of the Tax-Free Childcare scheme offered by the UK Government and the potential savings available to them. This scheme is offered in addition to the 15 hours free childcare [for non-working parents] and 30 hours [for working parents] offered by the Government for children aged between 3-4 years old. Thus, it's a very generous scheme that you should take full advantage of.
If you're working parent, either employed or self-employed, with children under the age of 12 you can opt into the scheme whereby you may be able to receive up to £2,000 per child per year. This can be extremely beneficial for families operating on a tight budget. Essentially how this works is you create an online account, via the gov.uk website, where you pay for your registered childcare. For every £8 of funds paid, the government will contribute an extra £2. This is effectively a tax rebate up to the basic rate of tax (20%). For parents of disabled children, the additional contribution by the government is up to £4,000 per child.
As an illustration, imagine if your cost of childcare for the month was £300 per month. You would be entitled to £60 per month towards this childcare cost by the Government. This would generate an annual saving of £720.
The scheme is not restricted to any one form of childcare, with the funding being available for various childcare activities including: after-school clubs, nurseries and home-care workers. In order to qualify for the scheme, the childcare provider should be registered with their relevant authority. Even if you're not a working parent, you may still be eligible for this scheme depending on your circumstances (e.g. you have caring responsibilities).
If you would like more information about how to reduce your tax bill contact us on 0115 955 5500 or email enquiries@pagekirk.co.uk.